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Response to “Experts urge gifting caution”

The Sunday Star Times (27 November 2011, D4) questions whether trust professionals are “urging people with family trusts to continue gifting at $27,000 a year despite the abolition of gift duty … to bolster their own profits.” Jonathon Cron of New Zealand Trustee Services is quoted as saying that “compliance saving [as a result of … Continue reading

Trustee liability can extend beyond retirement

Trustees, even professional trustees, do not always appreciate what is required to retire as a trustee, or who needs to be notified.  Often retirement is treated quite casually and a trustee may believe, quite incorrectly, that notifying the remaining trustees that he or she has retired is sufficient. This lack of formality or appreciation of what needs … Continue reading

Trustees’ loss of objectivity comes at significant cost

A fundamental principle of trust law is that trustees act personally.  However, there is a big difference between acting personally and acting in accordance with your personal beliefs.  This dichotomy, and the resulting consequences are high-lighted in the recent United Kingdom case of White v Williams.

Taxation of Australian trusts under review

New Zealand isn’t the only jurisdiction carrying on a love affair with trusts.  Although the numbers of trusts in Australia, once population adjusted, are less per head than in New Zealand, the numbers are significant with the Australian Tax Office reporting over 660,000 trust tax returns for the 2008-09 year.  These trusts spanning a broad range of industries … Continue reading

How to lose control of trust assets in three easy steps

The recent case of Rabson v Gallagher provides an excellent example of how not to use trusts in the context of protecting property from a relationship partner. The first mistake made was to intermingle relationship property and trust property.  Where this happens any party should expect the court to ensure that the disaffected former partner is compensated.  It is entirely possible and permissible … Continue reading

The importance of the envelope

A recent discussion on the main sources of trustee liability highlighted again, the importance of appreciating the subtleties inherent in the role of trustee.  The case under consideration revolved around three trustees, one of whom was a professional trustee, who decided to invest a substantial sum of trust money.  Enquiries were made, advice taken from … Continue reading

Safe Harbour from Penny and Hooper needs to be navigated with care

On 31 August 2011, Inland Revenue issued Revenue Alert RA 11/02.  This Revenue Alert sets out the Commissioner’s views in response to the decision in Penny and Hooper as to when diverting personal services income through an associated entity such as a trust will constitute tax avoidance. Key provisions The main points of the Revenue Alert can be … Continue reading

Unsuccessful claim of constructive trust on account of work carried out

The recent case of Three Chicks  v NZ Building Projects raises the novel question – can a remedial constructive trust be claimed in respect of work carried out under a contract? By way of background Three Chicks, the owner of a property, assigned a building contract to NZ Building Projects. Following the completion of the … Continue reading

Jurisidiction, divorce and trusts

Jurisdictional issues involving trusts are common in a tax context due to trusts being variously tax-resident in one jurisdiction or another depending on the residence of trustees and settlors.  Due to the mobility of settlors and trustees trusts can be resident in more than one jurisdiction with, at times, significant tax consequences. However, until recently the jurisdictional … Continue reading